...Jameson's Company chapter 20 in Bagley & Savage subject: Corporate Governance, Ownership, and Control: Forms of business organizations (e.g. sole proprietorship/limited partnership/llc/etc....) Ernie Jameson is a design engineer with a proven track record in the field of electronic instruments. He recently designed new VLSI very large scale integrated chip. This chip is meant to be the heart and soul of a digital sampling keyboard to b called Echo. Jameson believes the Echo will set a new industry standard. He wishes to organize a business enterprise to build and market it. He has a meeting with his lawyer and conveys to her the following bits of information: a. It will take approximately two years to turn the VLSI chip into a marketable product. b. Jameson has more than $200,000 in savings from previous ventures. He does not want any of that monyey at risk in his new venture. However, he wants a part of the ownership; he is unsure what percentage he wants. c. Currently, five private investors are willing to put money into this venture. Only two of the five want to play an active role in the enterprise. Jameson is willing to give these two some limited control. d. Jameson knows that he is not qualified to manage the new endeavor. Nonetheless, he wants a significant say in how it proceeds. e. Five more investors could be attracted to this product, but only if they could be guaranteed some fixed return on their money...
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...choosing a form of ownership. This section will lead you through your options and present the advantages and disadvantages of each (Hatten, 2006). When entrepreneurs establish a business, they must decide on the form of business ownership. There are different types of business ownership, and the type that is chosen can affect the profitability, risk, and value of the firm (Madura, 2004). Sole proprietorship, as the simple and easy to form type of business, is a business that is owned by one person. The vast majority of small business starts out as sole proprietorships. Sole proprietors own all the assets of the business and the profits generated by it. Most small business owners prefer the proprietorship because it is simple to enter, operate, and terminate and provides for relative freedom of action and control (Megginson, et al., 2000). On the other hand, partnership is defined as a voluntary association of two or more persons to carry on as co-owners of a business for profit. Like proprietorships, the law does not distinguish the business and its owners. The partner should have a legal agreement that sets forth how decisions will be made, how profits will be shared, how disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed. Yes, it is hard to think about a “breakup” when the business is just getting started, but many partnerships split up at...
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...Legal Forms of Business Consider each of the following forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Develop scenarios in which each of these forms of business would be the preferred form. For each scenario, justify why the corresponding business form is preferred. In today business world entrepreneurs are presented with many forms of business organization to choose from to conduct their business. Every form of business brings advantage as well as disadvantage and the selection of the legal form of the business organization available should base on according to Cheeseman (2010), “factors, including the ease and cost of the formation, the capital requirements of the business, the flexibility of management decisions, government restrictions, personal liability, tax consideration, and the like.” (Cheeseman, 2010). Sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate are the most known entrepreneurial forms of conducting nosiness. Below are you will find scenarios in which each of these forms of business would be the preferred form and justification why the corresponding business form is preferred. Sole Proprietorship Sole proprietorship represents the simplest form of the legal business organization where the owner, called in this form of business organization the sole proprietor, is...
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...There are many legal forms of businesses that can be selected when a new business is being established, or a previously established business is considering changing legal form. These legal forms of business each have innate advantages and disadvantages related to legal liability, taxes, continuity, and control. The legal forms of business include: sole proprietorship, general partnership, limited partnership, C-corporation, S-corporation, and Limited Liability Company. Other forms of business include: family limited partnership, professional partnership, professional corporation, and personal services corporation, but for the purposes of this document we will include only the most common and appropriate. We'll discuss the characteristics of each of these legal forms of business below. Sole Proprietorship: Sole Proprietorship is the most common form of business in the United States. This is most likely due to the ease with which this form of business can be established. In the United States more than 17 million companies are operated under the form of sole proprietor, this equates to approximately 73 percent of all businesses in this country. Sole Proprietorship is an unincorporated form of business which can be established simply and with very few legal formalities. Local permits and licensing are all that would be required in order to establish a sole proprietorship, unless the business intended to operate under a name other than that of its owner. A sole proprietorship can...
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...Introduction: The three basic legal forms of businesses in the United States are Sole Proprietorships, Partnerships, and Corporations. However, each of these forms can have variations and a hybrid called a limited liability company can be formed in all US States that exhibit the characteristics of both a partnership and a corporation (American College, n.d.). The following are some of the forms of business existing in the United States and their characteristics: a. Sole proprietorship b. General partnership c. Limited partnership d. C-corporation e. S-corporation f. Limited Liability Company This report contains an overview of some of the forms of business organizations that exist in the United States. Because of the federal system of the U.S., the many forms of business organizations are subject to the laws and regulations of the state where they operate or are registered. Both federal and state taxes are also taken into account by business owners and financial advisors in the choice of the business form (Perez, 2009). Liability, tax consequences, and legal implications are generally the most important actors business owners consider when choosing a business form. a) Sole Proprietorship The most basic of the forms of business organization is the sole proprietorship where the business is owned by a single person. There are more registered sole proprietorships in the U.S. than the other forms of business. In addition, many...
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...Legal Forms of Business Introduction The different forms of business include sole proprietorship, partnership, limited liability company, S corporation, franchise and corporate form. However, depending on the type of business and the number of individuals involved in starting the business can determine what the best form of business to suit the organization. The advantages and the disadvantages must be weighed and thought out carefully in order to minimize risks and possible litigation issues that could arise. A sole proprietorship is the most basic business form and is frequently utilized by a single person owning or running a business on his or her own. Such business enterprises are often run from the person's home. Owners pay taxes on the business profits and this is reflected on individual tax returns (Form 1040 and Schedules C and E). In some states, the costs of a business that is being operated from an individual's home may be deducted from income taxes. However, at the same time, certain counties and states may require a sole proprietor to pay property taxes on the value of any office equipment used for the business. In addition to tax liabilities, sole proprietors are also responsible for the debts of the business (Types of Business Organizations, 2008) If an individual wanting to begin a small mobile food cart business forming a sole proprietorship may be the best alternative. The sole proprietorship business form for the individual would...
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...Business Organization Entrepreneurs should write a business plan to help bring the idea of a new business venture. There are also regulations that should be followed when starting a business. The role that regulatory requirements play in the process of entrepreneurship within the health care field is, it provides a standard, or structured frame, which offers the entrepreneur the means to operate according to the law. This paper will define sole proprietorship, partnership, corporations, and limited liability companies, discuss the advantages and disadvantages of each, and discuss which the most important appropriate form of ownership is for an aggressive entrepreneurial firm. Define A sole proprietorship is defined as a form of business organization involving one person, and the person and the business are essentially the same. Sole proprietorships are the most predominant form of business organization. Partnership is defined as a form of business organization where two or more people pool their skills, abilities, and resources to run a business. A limited partnership is a modified form of a general partnership. The major difference between the two is that a limited partnership includes two classes of owners: general partners and limited partners. There are no limits on the number of general or limited partners permitted in a limited partnership. Similar to a general partnership, the general partners are liable for the debts and obligations of the partnership, but the limited...
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...Consider each of the following forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Develop scenarios in which each of these forms of business would be the preferred form. For each scenario, justify why the corresponding business form is preferred. In business world the first decision that is made is usually the most difficult. When making business investment decisions, the owner must decide what types of business organization is the best for the company or the nature of business. There are seven forms of business as well as scenarios in which each of these forms of business would be the preferred form will be discussed in this paper. Why the corresponding business form is preferred is also justified here. A person who wants to start a business must decide whether the business should operate as one of the major forms of business organization—sole proprietorship, general partnership, limited partnership, limited liability partnerships, limited liability company. An entrepreneur is a person who forms and operates a business. An entrepreneur may start a business by him- or herself or cofound a business with others. Most businesses started by entrepreneurs are small, although some grow into substantial organization. Every day, entrepreneurs in this country and elsewhere around the world create new businesses that hire employees, provide new products and services, and...
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...Business Organization Forms Alyssa Wiseman Western Governors University Overview The decision to change from one form of business organization to another can be quite a daunting task. With multiple factors to take into consideration, it should not be a decision that is taken lightly. I have been hired to facilitate this process by outlining six different forms of business organizations, the key characteristics that differentiate one form from another, such as liability, income taxes, control, continuity of the organization, profit, expansion, and compliance, and their advantages and disadvantages. Below you will find a detailed report on such findings, as well as a memorandum outlining my recommendations on changing business forms. Sole Proprietorship The majority of business forms in our country fall into this category. Sole proprietorships make up almost three quarters of all American businesses and most are one-person entities (Stevick, 2006). Since sole proprietorships are generally run by a single person, all of the business’s responsibilities, decisions, and capital fall back on the sole owner. While it is known that sole proprietorships are fairly small, the primary distinctive feature is the unlimited and unshared responsibility of the sole owner (Stevick, 2006). Liability. One drawback to sole proprietorship is that, along with sole responsibility and sole decision making, liability falls solely on the owner. “Financial liability is unlimited...
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...Forms of Business Organization Forms of Business Organization Have you ever imagined who commences the required capital, takes the accountability of arranging assets and other resources, operates them into practice, and controls and coordinates the operation to earn desired profits? If you search around, you will find a manufacturing business owned and operated by a single individual, who executes all these operations. It is significant for business owner(s) and manager(s) to comprehend the legal environment, in which their business(s) operate, not merely with regard to their own businesses however also as regards to other companies with whom they are doing business. In this context, there are six forms of business organizations, which are discussed below: a. Sole Proprietorship • Control Sole proprietorship is also termed as a sole trader. It is a form of business, which is owned and controlled by single individual and is the simplest form of business organization. The single owner of business has entire ownership and control over the assets and capital invested in the business and he or she is individually responsible (subject to some restrictions) for the expenses and liabilities of the business. • Liability A different advantage, nonetheless, is that the proprietor of this business form is responsible for all the business liabilities. Therefore, if a sole owner business undergo into financial crisis, creditors can originate lawsuits against the sole proprietor...
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...its own privileges and liabilities distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter (i.e. by an ad hoc act passed by a parliament or legislature). Most jurisdictions now allow the creation of new corporations through registration. An important (but not universal) contemporary feature of a corporation is limited liability. If a corporation fails, shareholders normally only stand to lose their investment and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors. Sole- Proprietorship A business structure in which an individual and his/her company is considered a single entity for tax and liability purposes. A sole proprietorship is a company which is not registered with the state as a limited liability company or corporation. The owner does not pay income tax separately for the company, but he/she reports business income or losses on his/her individual income tax return. The owner is inseparable from the sole proprietorship, so he/she is liable for any business debts also called proprietorship. A business can be set up in a variety of ways, ranging from a sole-proprietorship to a general partnership, an LLC to a corporation. Corporations are remarkably different from other forms of businesses in the sense that it is an independent legal entity that is separate from the people...
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...is the simplest form of business entity. Single person carrying on a business for profit. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure local licenses, and the sole proprietor is ready for business beginning and ending the business venture are uncomplicated steps requiring little more than the decision of the sole proprietor This can be an advantage, especially when the proprietor is not certain whether he or she will wish to continue the venture for any significant length of time and thus is unwilling to spend much money on filings, legal drafting, and the like. Disadvantages: The sole proprietorship does not have any legal existence separate from that of its owner. It also removes any shield from liability that might otherwise protect the proprietor. Thus, the proprietor is personally liable for all obligations of the business Partnership In contrast to general partnership law, a limited partnership is not dissolved by the death of a limited partner, and a limited partner may not compel dissolution of the partnership absent contrary provisions in the partnership agreement partners in general partnerships are jointly and severally liable for all obligations of the partnership, including losses...
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...has released funds for creating small businesses. In turn the student desires to start a small business and must decide which of the four forms of business organization would best suit the unique product or service. The information to follow will discuss the advantages and disadvantages of the four different forms of business organization, the different types of financial statements associated with each form of business organization, the following consequences associated with each form of business organization, an explanation of the unique product or service the small business provides, the choice of business organization form for the new business idea, and the rationale for choosing this form of business organization. Different Forms of Business The type of business may not be the first question a new or potential business owner contemplates. It is, however, a question that must be carefully addressed because of the tax, managerial, legal and liability impacts that the business formation has. There are a number of legal forms that a business can take. The most common are sole proprietorship, general partnership, limited liability company or LLC, and C or S corporation. Sole Proprietorship Sole proprietorships are probably the simplest and cheapest forms of business organization. They do not require registration with local, state or federal governments (other than taxes and special regulatory agencies). They are...
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...Legal Forms of Business LAW 531 Legal Forms of Business The first step in a new business is to decide how the business will be structured and the first executive decision will be to choose what type of business organization is the best. There are a number of legal forms that a business can take but to make that choice the following should be taken into account. For example: the size and scope of business, the level of structure, the level of control, tax matters, profit or loss of the business, re-investment issues, etc. There are several legal forms of business: sole proprietorship, partnership, limited liability partnership, Limited Liability Company, corporation, S corporation. Sole proprietorship In a first scenario a handyman who wants to get into business which will have little paper work and set up cost. The entrepreneur doesn’t have a partner and will be running the business alone. For this scenario the best business form will be sole partnership. This is a business with one owner which means the owner and business are inseparable. In other words the owner is the business and the business is the owner. The majority of small businesses start out as sole proprietorships because it has some advantages. • sole proprietorship is easy to form and operate • least expensive form of ownership to organize • owners are in complete control, and may make decisions by themselves • the owner receives all income generated by the business • it is easy dissolve the business...
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...“BUSINESS ORGANIZATIONS” Hundreds of thousands of people decides to start a business every year. There are quite a few different types of business in the United States and abroad. Choosing what form of business organization can be an important decision. Some businesses become successful, while there are some that fail. The three forms of business organizations are, sole proprietorship, partnership, and corporation. In this paper, I will discuss the three forms of business organizations, how much control its owners have, advantages as well as disadvantages and legal liability. The most common type of business operating in the United States today is sole proprietorship. It also is the easiest form. Sole proprietorship has only one owner, and he or she has total control. An example of a sole proprietorship is a beauty salon. The owner may hire other stylist to work for them, but still controls the business. There are some advantages of using this organizational form such as; the sole proprietor has full control, low startup cost, and profits. The one biggest disadvantage for sole proprietorship is the lack of protection from personal liability. Also it could be difficult to raise capital, and no one to continue the business. As sole proprietor, you have unlimited personal responsibility for your business’s liabilities (Brittin, 2001). For instance, if the company has trouble paying for supplies, the suppliers will be able to sue to recover the amount...
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